Interior chief to Congress: Want faster drilling permits? Show us the money

Interior Secretary Ken Salazar said Wednesday that accelerating the pace of offshore oil drilling permit approvals will be heavily dependent on receiving more funding.

The department is asking Congress for a major cash infusion for offshore oil-and-gas oversight, in part to substantially increase the staff for reviewing permits at a time when Interior is requiring drillers to meet toughened safety standards.

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Asked by a reporter when the pace of permitting might return to levels seen before the blowout of BP’s Macondo well last year, Salazar replied: “So much of it depends on this budget. If we can’t get the horsepower to be able to process permits under what now is a greater degree of scrutiny, we may never return to the pre-Macondo rate of permitting.”

He spoke to reporters after testifying before the Senate Energy and Natural Resources Committee. Interior is under heavy political pressure from Republicans and some Democrats to speed up permitting for both deepwater and shallow-water projects.

Interior on Monday approved the first deepwater permit since the post-spill federal moratorium on deepwater drilling was lifted in October.

The department’s fiscal year 2012 budget request seeks $358 million for its Bureau of Ocean Energy Management, Regulation and Enforcement (BOEMRE), a 50 percent increase above fiscal year 2010 levels for offshore regulation.

Interior is proposing to offset major portions of its budget request by collecting more money from oil-and-gas companies – the agency’s fiscal year 2012 plan envisions collecting $65 million in offshore inspection fees, among other revenue-raisers.

Salazar — in the hearing and to the media — emphasized that the department supports domestic oil drilling but noted that the agency is holding companies to tougher safety standards.

While calling for increased funding, Salazar also said the approval of the deepwater permit Monday for Houston-based Noble Energy will help pave the way for action on other applications in the near future.

“We are moving forward with the processing of deepwater permits and started with the first of those when we felt that that particular well could be drilled safely with the oil spill containment capabilities that were put into place, and that is why we moved forward Monday with the first of the deepwater permits,” he told reporters.

“I expect that what you will see over time, and in a short time, is additional permits being issued because we will have templates of the new permits and the oil spill containment mechanisms that are being put into place,” Salazar said.

The department is requiring oil companies to have access to equipment that can swiftly contain blown-out deepwater wells, and Salazar joined other top Interior officials in Houston last week to review enhanced containment systems developed by two companies for use by deepwater drillers.

Salazar, however, cautioned lawmakers that expanded U.S. development is not a cure for high oil prices. Interior’s GOP critics have been citing rising gasoline and oil prices in calling for faster permit approvals and opening more areas to drilling.

“The president and all of us involved are following what’s happening very closely in the Middle East, and we are doing what we can to stand up the domestic production,” Salazar told reporters, but added that “what we can produce domestically will not have an impact in terms of the price if oil because it is set on the world market.”

Salazar said there are other opportunities to curb oil import reliance and aid the economy, especially "if we could do a lot more with natural gas.”

“At some point in time, hopefully that is one of the things that we can engage the Congress in, to move forward with that component of the president’s energy agenda," he said after the hearing.

This post was updated at 5:04 p.m.